There's been a notable change in appetite for Acushnet Holdings Corp. (NYSE:GOLF) shares in the week since its yearly report, with the stock down 15% to US$25.45. It was a credible result overall, with revenues of US$1.7b and statutory earnings per share of US$1.60 both in line with analyst estimates, showing that Acushnet Holdings is executing in line with expectations. Earnings are an important time for investors, as they can track a company's performance, look at what top analysts are forecasting for next year, and see if there's been a change in sentiment towards the company. We thought readers would find it interesting to see analysts' latest (statutory) post-earnings forecasts for next year.
Taking into account the latest results, Acushnet Holdings's six analysts currently expect revenues in 2020 to be US$1.69b, approximately in line with the last 12 months. Statutory earnings per share are forecast to decrease 6.5% to US$1.50 in the same period. Before this earnings report, analysts had been forecasting revenues of US$1.72b and earnings per share (EPS) of US$1.70 in 2020. Analysts seem to have become more bearish following the latest results. While there were no changes to revenue forecasts, there was a substantial drop in EPS estimates.
The average analyst price target fell 5.1% to US$27.66, with reduced earnings forecasts clearly tied to a lower valuation estimate. That's not the only conclusion we can draw from this data however, as some investors also like to consider the spread in estimates when evaluating analyst price targets. There are some variant perceptions on Acushnet Holdings, with the most bullish analyst valuing it at US$33.00 and the most bearish at US$24.25 per share. As you can see, analysts are not all in agreement on the stock's future, but the range of estimates is still reasonably narrow, which could suggest that the outcome is not totally unpredictable.
It can also be useful to step back and take a broader view of how analyst forecasts compare to Acushnet Holdings's performance in recent years. We would highlight that Acushnet Holdings's revenue growth is expected to slow, with forecast 0.5% increase next year well below the historical 2.0%p.a. growth over the last five years. Compare this against other companies (with analyst forecasts) in the market, which are in aggregate expected to see revenue growth of 15% next year. So it's pretty clear that, while revenue growth is expected to slow down, analysts still expect the wider market to grow faster than Acushnet Holdings.
The Bottom Line
The biggest concern with the new estimates is that analysts have reduced their earnings per share estimates, suggesting business headwinds could lay ahead for Acushnet Holdings. On the plus side, there were no major changes to revenue estimates; although analyst forecasts imply revenues will perform worse than the wider market. The consensus price target fell measurably, with analysts seemingly not reassured by the latest results, leading to a lower estimate of Acushnet Holdings's future valuation.
Even so, the longer term trajectory of the business is much more important for the value creation of shareholders. We have forecasts for Acushnet Holdings going out to 2022, and you can see them free on our platform here.
It might also be worth considering whether Acushnet Holdings's debt load is appropriate, using our debt analysis tools on the Simply Wall St platform, here.
If you spot an error that warrants correction, please contact the editor at email@example.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned.
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